Google reduces App Engine cloud costs by up to 25% (Amazon, next move is yours)

All that’s missing are the streamers, balloons, and cheesy Best Price Ev-ah signs. Because the price competition between Google, Amazon, Microsoft, and Rackspace is heating up so fast, the cloud market could be a massive virtual used car lot.

Google announced today that it is reducing the cost of its Google App Engine storage from $0.24/GB/month to $0.18 per gigabyte. App Engine operations pricing is also going down: Google is dropping database writes from $0.10 to $0.09 per 100,000 operations and reads from $0.07 to $0.06.

This new price decrease appears to match those from Amazon and Microsoft. The challenge, however, when evaluating cloud costs from multiple providers is that each vendor calculates costs somewhat differently, so it’s hard to get an apples to apples comparison.

Essentially, it’s become fairly obvious that cloud is a commodity, and the cheapest provider will win. The question is, can companies maintain excellent service levels while cutting pricing to the bone.